Many health care providers experienced operating improvement in 2015 as patient volumes grew and cost adjustments took hold. But they still must navigate transformation in the delivery of care and how it is compensated, along with the ongoing effects of health care reform legislation (PPACA). In response to the changing industry landscape, health care organizations have engaged in mergers, acquisitions, and other strategic activities, and have made difficult management decisions.
Mercer’s dedicated health care investment consulting practice, which partners with health care institutions to integrate investment strategy with operating and financial objectives, has identified 10 investment considerations for not-for-profit health care organizations in 2016.
“As health care organizations plan for 2016, Mercer advocates a process that incorporates the need for investment assets to enhance balance sheet strength, fund capital investment needs, support operating budgets, and maintain debt covenants. Based on experience working with many institutions in the health care industry, we believe 10 areas should be the focus of attention in the year ahead.”
— Michael Ancell, Mercer national segment leader for health care investments
If you have completed a merger recently, have you assessed your retirement plans and retirement plan design?
How clearly defined is your DC plan’s governance structure, including the responsibilities of key stakeholders?
In light of recent balance sheet strengthening, have you considered increasing your risk tolerance?
Are your investment strategy and organization’s financial plan integrated in order to help you identify or confirm an appropriate risk floor?
If you have made or are considering any M&A strategic actions, have you considered whether your investment strategy needs any changes?
Do you have a detailed strategy to get a db plan fully funded, with trigger points identified, to reduce funded status volatility along the way?
With central bank policy contributing to US market recovery and many foreign central banks adopting more aggressive easing policies, how should investors consider asset allocation decisions for global portfolios?
What role do inflation sensitive investments play in long-term nonprofit portfolios, and how strongly does general inflation correlate to your organization’s experienced inflation?
Are you continually assessing the governance structure of your investment portfolios save you time and money?
Are you prepared to deal with low yields on US investment grade bonds reducing investment portfolio returns?
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